Discusses key economic indicators and trade statistics, which countries are dominant in the market, and other issues that affect trade.
Historically, the U.S.-French commercial and economic alliance is one of the United States’ oldest and closest. The United States and France established diplomatic relations in 1778. The United States’ first trade agreement, the Treaty of Amity and Commerce between the United States and France, was signed that same year. Relations between the United States and France have remained active and friendly. Our countries share common values and have similar policies on most political, economic, and security issues.
With a GDP of approximately $2.94 trillion in 2021 and an estimated $2.63 trillion in 2022, France is the world’s seventh-largest economy and Europe’s third-largest economy after Germany and the UK. It has substantial agricultural resources and maintains a strong manufacturing sector, despite a recent decline. Dynamic services sector now accounts for an increasingly large share of economic activity and is responsible for most job creation in recent years. France initiated the G-20, is host to the OECD, and is a member of the G-7, the European Union, and the World Trade Organization, confirming its status as a leading economic player globally.
France has a stable business climate that attracts investors from around the world. The French government devotes significant resources to attracting foreign investment through policy incentives, marketing, overseas trade promotion offices, and investor support mechanisms. France has an educated population, first-rate universities, and a talented workforce. It has a modern business culture, sophisticated financial markets, a strong intellectual property rights regime, and innovative entrepreneurs and business leaders. The country is known for its world-class infrastructure, including high-speed passenger rail, maritime ports, extensive roadway networks, a dense network of public transportation, and efficient intermodal connections. High-speed (3G/4G) telephony is nearly ubiquitous, and 5G is now available in large and many mid-sized metropolitan cities.
Trade and investment ties between the United States and France are strong. On average, almost $350 million in commercial transactions, including sales of U.S. and French foreign affiliates, takes place every day. U.S. exports to France include industrial chemicals, aircraft and engines, electronic components, telecommunications, computer software, computers and peripherals, analytical and scientific instrumentation, medical instruments and supplies, and broadcasting equipment.
In 2021, the United States was the leading foreign investor in France in terms of new jobs created (10,118) and second in terms of new projects invested. The total stock of U.S. foreign direct investment in France reached over $91 billion. More than 4,500 U.S. firms operate in France, supporting over 500,000 jobs, making the United States the top foreign investor overall in terms of job creation. French firms are the 5th largest source of foreign investment in the United States, supporting almost 750,000 jobs in the U.S. Over the past few years, clean technology companies are a leading sector for French FDI.
Following the first election of French President Emmanuel Macron in May 2017, the French government implemented significant labor market and tax reforms. By relaxing the rules on companies to hire and fire employees, the government cut production taxes by 15 percent in 2021, and the corporate tax fell to 25 percent in 2022. Surveys of U.S. investors in 2021 (latest data) showed the greatest optimism about the business operating environment in France since 2008. Macron’s reform agenda for pensions was derailed in 2018, however, when France’s Yellow Vest protests—a populist, grassroots movement for economic justice—highlighted wealth and, to a lesser extent, income inequality.
The onset of the Covid-19 pandemic in 2020 shifted Macron’s focus to mitigating France’s most severe economic crisis in the post-war era. The economy shrank 8.3 percent in 2020 compared to the year prior, but with the help of unprecedented government support for businesses and households, economic growth reached seven percent in 2021. The government’s centerpiece fiscal package was the €100 billion ($110 billion) France Relance plan, of which over half was dedicated to supporting businesses. Most of the support was accessible to U.S. firms operating in France as well. The government launched a follow-on investment package in late 2021 called “France 2030” to bolster competitiveness, increase productivity, and accelerate the ecological transition.
Key Link: https://www.bea.gov/international/#bop
Political & Economic Environment: State Department’s website for background on the country’s political environment